Tax season is just around the corner, so people are scrambling to see what their accountant tells them about retirement accounts. Everyone has different reasons for saving money, but it is often for retiring in the future. Even though saving for the future usually is a good thing, there are some distinct disadvantages when you do it through a traditional retirement account. An IRA is a tax-deferred investment account that gives you a variety of options for investing your retirement funds. With an IRA, many individuals can save money that they would have spent on taxes. But that’s not all. Here are four key points a cryptocurrency solves!
Convert Large Amounts of Crypto to Cash, or Cash to Crypto
The way you store your money in a retirement account can significantly impact your tax bill. That’s one reason why self-directed IRAs have become so popular — they allow you to invest more of your assets in the types of assets you want instead of being limited to traditional assets like stocks and bonds. Cryptocurrency IRAs from Viva Capital are a relatively new feature, but they’re gaining importance as more people get into the market.
Cryptocurrency IRA could allow you to convert large amounts of cryptocurrency to cash for tax purposes – or cash to crypto if you’re planning for retirement. The number one question you have to ask yourself is whether you want to liquidate your retirement fund or not. If you do, then the world is your oyster. There is no limit on withdrawals, and you can take it out at any time and use it however you want.
How it works
A cryptocurrency IRA holds digital currency in any IRA custodian. The value is determined by the current exchange rate. It’s easy to move money around between the custodial account and your account, so you can invest in other investments or make unlimited withdrawals at any time. You’ll pay taxes on any earnings only when you withdraw them from the IRA (or roll them over into another retirement account). And if you’re converting crypto to cash, when you withdraw the money from your IRA account, it will be taxed at capital gains rates.
Estate Planning for your Crypto
In the event of your death, cryptocurrency IRA guarantees a seamless transfer of your investment to your beneficiaries. It goes beyond the bureaucratic procedures associated with fiat currencies in testate cases that will waste a lot of time and resources to pursue. All you need to do is stipulate your next of kin, and the benefits will transfer to them after your demise. This way, you guarantee your family’s future, even if they don’t have any knowledge of crypto and crypto investment.
No Custody Failures
Private retirement accounts are a great way to invest for retirement, but there are limitations on what types of investments you can make. With a traditional IRA, you can only use stocks and bonds. However, with a cryptocurrency IRA, you have more options. You can put about any investment in your account, including real estate and cryptocurrencies like Bitcoin and Ethereum. A cryptocurrency IRA is especially attractive because it allows you to invest in emerging technology without risking your funds. Your money will be held separately from your personal assets and kept in a trust that holds only cryptocurrency assets. A third-party custodian will hold your coins for you, so you don’t have to worry about securing them yourself.
Reduced Taxes and Political Risk on Your Investment
Cryptocurrency IRA protects against political risks since it is not tied to a single country’s economy. If one currency crashes, you will still have another one that you can use to make up for the losses. In fact, as cryptocurrencies become more popular, it is possible that these accounts might even increase in value. Additionally, when you buy cryptocurrencies with fiat money, any profits that you make from investing are considered capital gains and subjected to taxes. However, when you buy them in a cryptocurrency IRA account, these profits are not taxable and thus help cut down your overall tax burden.
Now that you know the issues a cryptocurrency IRA account can solve, enroll an account today to protect your investment!